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By Omodele Adigun
As Naira depreciation continues to give manufacturers a bit of nightmare from exchange rate losses, outgoing Managing Director of May & Baker Plc, Mr Nnamdi Okafor, has urged the Federal Ministry of Finance (FMoF) and the Central Bank of Nigeria (CBN) to implement fiscal measures to make locally manufactured products more competitive than imported brands.
Okafor, who made the plea in Lagos during his valedictory media luncheon at the weekend, said such policies should include high tariffs to control influx of foreign goods into the country and provision of accessible credit facilities for manufacturers. He argued that those were the steps, among others, that could make local companies utilise capacity and help them compete effectively when the African Continental Free Trade Area(AfCFTA) Agreement takes off on January 1, 2021
His words: “The bulk of the N100 billion CBN intervention fund is for capital projects.It is not for working capital; it is meant to help you build capacity and not to utilise your idle capacity. Indeed, what will help us utilise capacity is fiscal measures, like tariffs, that do come from the Federal Ministry of Finance, that will make locally manufactured products more competitive in the markets compared to the imported ones. For example, the decision, controlling products that come into Nigeria; the way local companies that manufacture here are able to access funds. Those are what we demanded from the CBN and, of course, the Federal Ministry of Finance, in a sense, to ensure that these happen. CBN move, really, is to increase capacity. But this money is available in Naira. So for you to be able to import whatever, you need foreign exchange (forex).
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At the meeting we had with the CBN Governor, he had assured us that any company that is ready to bring in equipment will be provided with forex. Indeed, forex is a major issue.
It is a major issue whether for intervention fund or for normal operations. It is almost impossible to get up to 20 per cent of your forex needs. This (inability to access forex) has made our cost to go up. For instance, as against N380 per Dollar in our plan for exchange rate this year , today, we are getting Dollar for about N470; N450. So, it has caused us huge exchange rate loss. We have to take care of that major loss. It is a major issue for our profit and loss account. It is also making the product more expensive. Sometimes, it is also making it difficult for us to bring in our products. So there is scarcity of some of our products in the market.
The most painful to me really is that for most of our suppliers who have confidence in us, some of them gave us credit, we were unable to pay them when this money was due. And there are instances, we were blacklisted in China. It is very pathetitic because it was not as if we didn’t have the Naira to honour our obligations but there was no forex. So it is a very big problem for us as business and for other companies in this space.”
